'Piramal's stake deal with Shriram Capital set to materialise'

Piramal is already associated with the group after he picked up private equity major TPG's 10 per cent in Shriram Transport Finance last year. Reuters

SummaryAjay Piramal's bid to pick up a stake in Shriram Capital will be fructified this quarter.

Ajay Piramal's bid to pick up a stake in Shriram Capital will be fructified this quarter, a top official from the diversified financial group has said.

"We have been talking to him (Piramal) and we believe this quarter the deal should happen. The issue is more on how much percentage of stake we should give to him. But in this quarter it will be definitely concluded," GS Sundararajan, Group Director at Shriram Group, said.

Piramal is already associated with the group after he picked up private equity major TPG's 10 per cent in Shriram Transport Finance (used-commercial vehicles financier) last year.

Sundararajan said henceforth, the group, which has seen the participation of many a private equity firm in the past, will focus more on strategic investors rather than PEs.

The group executive, who is also the managing director of Shriram City Union Finance, the SME, two-wheelers, gold and housing financier of the group, said the group will not need any fresh capital for the next 18 months.

The home loan business, which was started two years ago with a capital of Rs 270 crore from the parent company, may need some capital over the next 18 months as it expands its book, Sundararajan said.

However, rather than going to outside investors before achieving a particular size, the housing finance arm will be capitalised by Shriram City Union or by Shriram Capital.

The housing finance arm aims to close with a book of Rs 400 crore this fiscal and expand that to Rs 1,000 crore by the end of FY 2015, he said.

On its other businesses, Sundararajan said the company's two-wheeler book would have expanded 60 per cent in the quarter to December as well and added the business will grow fast at least for the next 18 months.

On the liabilities side, he said half of the bank lines available to Shriram City Union is still unspent and added that the company will continue to maintain the 75:25 ratio between bank funding and retail debentures, respectively.

It will like to maintain the current mix of having around 23-25 per cent in gold loans and two wheelers respectively and the rest for small businesses, he said.